Housing inventories in China's major cities fell for a third-consecutive month as destocking measures kicked in, making further increases in home prices likely, latest industry data showed.
Unsold new homes in 35 major Chinese cities totaled 244.8 million square meters at the end of July, down 1 percent from June and 5.6 percent from a year earlier, according to figures released by the property research agency E-house China R&D Institute.
The area of unsold new homes in first-tier cities dropped 4 percent in July from June, while that for second-tier cities slipped 0.5 percent and that for third-tier cities decreased 1.2 percent.
On a year-on-year basis, the declines of inventories for first-, second- and third-tier cities were 18 percent, 4.5 percent and 0.1 percent, respectively.
It will take 10 months to sell the remaining new homes in the 35 cities if they are sold at the a speed that matches July, compared with 10.5 months estimated in June, according to the agency.
The accelerated destocking was behind recent home price increases and will continue to drive prices up in the third quarter of the year, said Yan Yuejin, an analyst with the agency.
New home prices in China's 10 biggest cities, including Beijing and Shanghai, rose 17.2 percent year on year to hit an average 22,945 yuan (3,459 U.S. dollars) per square meter in July, according to China Index Academy (CIA), a property research organization. The growth was 1.21 percentage points faster than June.
China's housing market started to recover in the second half of 2015 after cooling for more than a year, boosted by pro-growth policies, which included interest rate cuts and lower deposit requirements.
The sector's recovery, however, has been uneven from city to city, with economically-strong areas reporting drastic price rises, and less developed areas still reporting huge inventories of unsold houses.
